No decision yet on ADB loan
Govt may have to slash power subsidy to farm sector

Even as a team of Asian Development Bank (ADB) officers continued talks with senior Government officials on whether to release the final tranche of the $100 million loan to the State Government, a clearer picture on this is likely to emerge when ADB’s senior manager Rajat Nag joins the negotiations here on Monday.

"The ADB team seems to have accepted the Government’s explanation on the latter’s inability to bring down the fiscal deficit of the State.

But the team appears a bit concerned about the Government’s helplessness to slash the power subsidy in the farm sector," a senior Government official said.

The ADB has put forth at least three main conditions to sanction the loan for the State Government’s Public Sector Resources Management Programme.

The conditions include bringing down the fiscal deficit, slashing power subsidy in the farm sector and closing down of its three loss-making public sector undertakings.

The Asian Development Bank has already released the loan of $ 150 million in two separate installments for the programme.

When asked whether the response of the ADB officials during the on-going talks was positive, the Government functionary said, "This is the fact-finding mission comprising junior Asian Development Bank officers. They are just collecting details about the economic reforms initiated by the Government.

‘A clearer picture may emerge when mission leader Nag joins the talks on Monday."

The official said after the appraisal exercise was over, Nag would submit a detailed report to the ADB board for a final decision on the third tranche of the $100 million loan.

The sanctions imposed by the US and Japan on India following the nuclear tests are still in force. This is also seen as a contributory factor in delaying the release of the third tranche of the ADB loan.

Responding to a query, he said the Government would have to take some drastic measures to slash power subsidy in the agriculture sector.

"There is no other option for it but to increase the existing power tariff in all categories. Besides, the GEB will have to improve its functioning to make up for the huge financial losses it has been incurring for long," asserted the officer.

Compiled from local news media.